Pastry products are high demand products. They are high in starch which is an invaluable nutrient. If you have a passion in baking, you can transform this gift into a fortune by opening a bakery business. A bakery business is a very profitable and lucrative business venture. The bakery business offers you various options and products which you can concentrate on. The main product is bread and it constitutes the larger market share and is the most demanded. You need to carry out market research and have a good bakery business plan before you start this business.
What you need
Location for your Bakery Business
Location is an important factor in determining the success of your bakery business. The large bakeries like Bakers Inn have production plants in the industrial ares. They will then use trucks to deliver to all parts of the country. However, for a small bakery business, the production and selling of bread can happen in the same shop. Thus you will have to locate your bakery shop where there is a lot of foot traffic. You can locate your bakery shop in the CBD, or shopping centers where there is a lot of traffic. The kind of products you sell will also affect the decision of where you locate your bakery. You can’t locate bakery shop in the high density ares and expect to sell highly nutritional rolls which cost $3 each.
Research and know the type of people who live in the targeted area, whether they are low, middle or high class income earners, age, family or singles. Look for newly established suburbs and high traffic locations. These have a few competitors. There are so many new residential areas being developed around Harare. The same applies if you are concentrating on cakes.
You need to determine the kind of products which will be produced by your bakery business. Bread is the most common type of product sold by many bakeries. At least 70% of breakfast diets in Zimbabwe contain bread. The daily demand stands at 800 000 to 1 million loaves per day. It competes with other starch products such as rice and sadza. It is a ready to eat product and as such it is very convenient and preferable. A bakery can be set up from the back of your kitchen or a bread factory.
Plain white bread
This type is very cheap and basic. It is highly demanded by low income earners. It has no brand or much labeling and its nutritional value is low. In production, little attention is paid to matters concerning quality, taste. This type is usually produced by in house bakeries in most supermarkets around Zimbabwe. The weight of the bread is much lower than the standard white bread which weighs 700g. It is sold for $0.50, and it is packaged in plain white plastics.
Branded white bread
This is the standard bread which is sold in most supermarkets in Zimbabwe. It weighs 700 grams and costs $0.90 – $1. The popular brands are Bakers Inn, Lobels and Proton Bread. They come with a nice packaging which contains the nutritional information and brand name of the bread. Competitors in this market are franchise bakeries, industrial bakeries and small independent bakeries.
Whole wheat and brown bread
Your bakery business can also make whole wheat and brown bread. This is a special type of bread mainly for the health conscious people. Other reasons maybe cultural or related to lifestyle. It is usually sold in specialty stores or sections and supermarkets. The price costs between $1 – $2 depending on the ingredients, brand and weight.
Cakes have a growing demand and you can operate a bakery focusing on this product alone. With so many events and celebrations such as birthdays, anniversaries, weddings, graduation, engagements and even small tea garden celebrations you can make lots of money. This is a specialized baking area of its own.
Other confectionery products
There are many other confectionery products your bakery business can produce. These products include rolls, twists, cream doughnuts, meat pies, buns, cookies, pizza e.t.c. The other confectionery products usually contain high nutritional value. The ingredients are may include extras such as eggs, milk and fruits amongst others. The supplements are healthy and not addictive. The target market are households who are very conscious about food standards such as quality and taste, and who want variety of products. The customers are willing and able to pay the extra charge to derive quality.
You can increase your sales by offering a variety of different products and thus increase the profitability of your bakery business. Depending on your target market and bakery business model, you can concentrate on producing the other confectionery products, instead of the standard bread. Alternatively, these other confectionery products can be there to supplement the income from bread which will be the main source of revenue.
Depending on the business model for your bakery business, you may require delivery trucks. These will be delivering your products to various shops and supermarkets around the city. Because of the expense in buying new trucks, most start up bakeries begin by hiring delivery trucks, and then purchase their own trucks when the business has become profitable.
Quantity, type and size of equipment will depend on the quantity of bread products you wish to produce per day. Also depending on the amount of start-up capital you have you many have to settle for smaller equipment. Look around for equipment shops that sell good second hand bakery equipment you can purchase at a bargain price. This will reduce your start up costs. Equipment required may include ovens, cooling conveyors, slicing machines, dough mixers, fermentation chamber (proofer), refrigerators, utensils, pans and tools.
You should get a shop license from the City Council for your bakery business. Your shop will first be assessed by the health inspectors to check if the shop meets all health requirements and standards. If the health requirements are met, the shop license is approved and you can start operations. Also note that from time to time, the health inspectors carry out inspections to check if one is maintaining the required hygiene standard. Do not be found on the wrong side of the law, lest your bakery license be withdrawn.
Management and employees for your Bakery Business
With such high demand with bread and having targets to meet, you need experienced bakers. Do not compromise on quality and it is important that you only hire the best. Hire employees with a learning attitude. Your long term goal is continuous improvement of your products and you can never go wrong with such an attitude. You may introduce new products altogether. You will need bakers, sales people and cashiers. The number of employees you need will depend on the size of your bakery business. For bigger bakery businesses, you also require full time finance staff, accounting staff and logistics staff.
You will be targeting the households and individuals in the area where your butchery business is located. Bread is an integral part of the breakfast meals of a majority of households in Zimbabwe, and its demand is very huge. Employed people who work in the CBD buy various confectionery products e.g. rolls, twists, bread etc to eat during break time at work. The products can also be supplied to companies, organisations, churches, schools etc.
You can also supply your confectionery products to the various supermarkets around the city. There will be need for a delivery truck and sales people to deliver and various confectionery products around the city. This will push up the volumes of your products. Many small shops and supermarkets do not produce bread products ton their own, thus they will need someone to supply the products to them.
No matter how good you are at baking, no one will know unless if you inform them. Marketing is then the best tool you can use to reach out to your target market. Set aside funds for marketing. Use social media to advertise and promote your products. Join business and social groups and network. Creating relationships is beneficial especially if this is done in the area you wish to operate in. Make a website for your bakery business. Most people use the internet more and setting up a website can be more beneficial to your bakery business. Customers are your key to success. If you cannot appreciate and treat your customers like queens and kings, your business is doomed. Ask for feedback and make sure their experience is memorable.
In order to capture a market of your own, be the best at what you do and concentrate more on quality, taste and the preferences of the market you wish to service. If you are targeting the middle and high income earners then your business will thrive. To differentiate, produce the best types of complementary confectionery such as cupcakes, doughnuts, muffins, Vienna rolls, Italian rolls and the best pies. There is got to be someone out there who is addicted to one of the above.
Capital for Bakery Business
Start up costs will depend on the type of equipment required, and the size of your bakery business. Since these must be purchased once off, compile a list of all equipment required. You can start a small bakery business with at least $10 000.
It will be difficult to immediately be profitable. Sit down and calculate how much you need to break even and the total production costs required. You will definitely need funds to keep you going for a while until you can meet up all your costs.
Profitability and costs
If you are producing bread only, then your profit margins will be low, and you will need to push volumes in order to be profitable. The other confectionery products have a higher profit margins than bread. It’s essential that you get many customers so that you push your revenue up to ensure that you cover your fixed costs.
Costs for the bakery business include electricity, water, rentals, salaries, inventory (flour, sugar, milk e.t.c.), marketing costs, fuel etc. Pricing and high volumes influence profitability. A small bakery business can make profits of $1500 to $4000 a month.
Is the Bakery business viable?
The bread market in Africa is in a boom state and is expected to continue as such due to the growing population. The high rate of success for this business is also influenced by the growing middle class with more money to spend, a growing labor force and the high increase of rural to urban migration. The bakery business is very rewarding if you can capture a large market. Your main competitive advantage should be quality. With quality you can easily tap into your competitor’s market.
We wish you the best in your bakery business. Check out more business ideas and our collection of business plans. Like us on Facebook, follow us on Twitter, and subscribe to receive notifications of new posts in your email.
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